There’s Always a Bear Market Somewhere
A growing chorus claims artificial intelligence is disrupting markets. Change often sparks unease, and many value investors grapple with concerns about their research processes, market efficiency, diminished information advantages, and more. From my perspective, my contrarian approach is well-positioned to thrive in this AI-driven landscape, awash with real-time data. Tools like large language models parse vast datasets in seconds, delivering insights that once required days of meticulous research. Yet, I view AI not as a cause for concern but as an opportunity to adapt to a new era of value investing, where its disruptive potential reshapes the game. In my view, this is an opportunity to focus intensely on human attributes that AI has yet to make more efficient—fear and greed, amplified by stress, loss aversion, herd mentality, and the impulsivity of overconfidence.
“When everybody goes insane, staying sane is your competitive advantage.”
Charlie Munger
My approach hinges on contrarian thinking—embracing chaos where others see only peril. Drawing on Charlie Munger’s principle of inversion, I shun the mainstream obsession with bull markets, often amplified by voices like Jim Cramer’s claim that “there’s always a bull market somewhere.” Instead, I hold that true opportunities lie elsewhere, as I often say: “There’s always a bear market somewhere.” The reason I’m drawn to turmoil is simple: chaos amplifies extreme human emotions—fear and greed—alongside stress-fueled impulsivity and herd-driven overreactions, driving irrational behavior that misprices assets. When the world’s randomness throws curveballs, opportunities emerge. With my global value approach, such curveballs are abundant, from volatile small-caps to emerging markets reeling from crises.
In my view, a former era of value investing—perhaps a golden age—may be fading, but the future of AI’s impact remains uncertain. While many assume AI will enhance market efficiency, its broader effects could, unexpectedly, amplify inefficiencies—potentially by fueling herd behavior or creating new blind spots. Only time will reveal the full scope of this transformation, making adaptability essential for success. From my perspective, the promise of contrarian value investing lies in the opportunities it offers to the bold and discerning, who can transform market inefficiencies into lasting wealth.
“The biggest investing errors come not from factors that are informational or analytical, but from those that are psychological.”
Howard Marks